Saturday, 16 July 2016

Pound Gains As Bank Of England Holds Off Rate Cut


A Kuwaiti vendor holds British Pound banknotes at a money exchange shop in Kuwait City. / AFP / YASSER

The pound built on the previous day’s gains in Asia Friday after the Bank of England surprised markets by holding fire on an interest rate cut at its first meeting since Britain voted to leave the European Union.
Many had expected a move to counter the fallout from the shock vote last month, and after Bank chief Mark Carney hinted more easing was in store.

However, the central bank signalled a possible August cut.
“The precise size and nature of any stimulatory measures will be determined” next month, BoE policymakers said.
In Tokyo, sterling rose to $1.3469 from $1.3344 in New York where it had jumped 1.5 percent immediately after the Bank decision.
Speculation of more stimulus from Japan’s government and central bank pushed the yen lower.
The greenback jumped to 106.22 yen from 105.44 yen in New York, returning to levels seen before the British vote pushed the yen soaring as investors sought out safe assets.
“Anticipation of a massive stimulus package continues to drive investor sentiment and the ensuing divergence in monetary policy between the Federal Reserve and BoJ continues to weigh on the yen,” said Stephen Innes, senior trader at OANDA Asia Pacific.
“However, major headwinds emanating from the Brexit fallout, not to mention the US presidential election, are more likely to turn investors guarded, despite Japan’s stimulus efforts. So expect a bumpy road ahead.”
Sentiment also got a lift from data showing China’s economy grew more than expected in April-June, which fuelled hopes growth may be stabilising in the world’s number two economy.
The euro rose to 118.23 yen from 117.22 yen and to $1.1135 from $1.1117 in US trade.
Credit:AFP

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